Sanctions-Busting N. Korea Runs Barter Trade: Analysts

Jul. 18, 2013 - 07:36AM
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SEOUL — The seizure of a North Korean cargo ship loaded with undeclared weapons near the Panama Canal highlights a secretive barter trade by the isolated state aimed at evading UN sanctions, analysts say.

Pyongyang claimed Cuban arms found on the vessel this week were part of a legitimate deal after Havana had earlier said “obsolete” Soviet-era missiles and parts on board were being sent to North Korea for repair.

Analysts say the discovery of the arms, which were found among tons of sugar, shows how the North is responding to intensifying UN sanctions following a long-range rocket test in December and a third nuclear test in February.

They say barter trade is convenient for North Korea because it leaves no financial records and does not require the country using more of its scarce foreign currency.

Hugh Griffiths of the Stockholm Peace Research Institute said the haul was likely an example of a “barter trade of unknown magnitude” in which North Korea offers to repair old Soviet or Chinese military equipment in return for currency or food.

He added that it was significant the seized items were concealed in a cargo of Cuban sugar.

“Most of it slips under the radar. Attention focuses on North Korea’s ballistic missile capabilities and its nuclear capabilities, but most of its foreign trade is actually in conventional arms with a small group of countries,” Griffiths said.

Over the years, North Korea’s trading partners have included poor and isolated countries such as Myanmar, Eritrea and Yemen, Griffiths added.

“Within this context they need to trade, and North Korea has the technicians that can handle machinery both on the civilian and military side, so it’s a natural match in many ways,” he said.

North Korea has become adept at disguising this trade, often transporting the items in containers carried by respectable shipping companies that have no idea what is actually inside, he said.

“It’s very anonymous and hard to identify. Globalization and containerization have made trade easier but also made trafficking easier,” Griffiths said.

Chang Yong-Seok of the Institute for Peace and Unification at Seoul’s National University told AFP that Monday’s discovery by Panamanian authorities was “just the tip of the iceberg.”

“In the case of Cuba, North Korea has been involved in this type of trade since the 1960s, when Pyongyang reached out to non-aligned countries,” he said.

Chang noted that impounding of the Chong Chon Gang ship “comes at a time when the United States and its allies have been stepping up sanctions against the North and expanding information sharing on its illicit trade.”

A report by a UN Security Council panel of experts last month said Pyongyang had continued to import and export items relevant to missile and nuclear programs despite sanctions.

In May 2012, missile-related parts on board a Chinese-flagged vessel bound for Syria were seized in Busan, South Korea.

The cargo contained 10 metric tons of graphite cylinders, falsely declared as lead pipes, and the UN suspected a North Korean company was behind it.

In December 2009, Thailand seized an arms shipment worth $16 million, which was falsely declared to be mechanical parts, on board a vessel that departed from Pyongyang.

In 2008, rocket fuses from North Korea bound for Iran were seized, and also that year, shipments of spare parts for tanks and armored vehicles heading for Congo were stopped, the UN report said.

Ham Hyeong-Pil at the Korea Institute for Defense Analyses described Cuba’s claim that the weapons were heading to the North for repair as “plausible,” noting that the shipment came after Pyongyang’s military chief, Kim Kyok-Sik, visited Havana last month.

“A well-informed North Korean defector who recently came to the South said the North had sent about 100 troops to Cuba for technology transfer and joint training as part of military cooperation,” Ham said.